Housing Showing Signs Of Slowdown

Existing Homes For Sale In Greater Hartford Are On The Increase For 3rd Straight Month

September 02, 2004|By KENNETH R. GOSSELIN; Courant Staff Writer

Sale prices for single-family homes continue to rise in Greater Hartford, but the number of homes on the market grew in July for the third straight month, a clear signal the area's housing market is cooling.

The inventory of homes for sale in the area jumped 14.5 percent in July from the same month a year ago, according to the Greater Hartford Association of Realtors. That followed increases of 12 percent in June and 10 percent in May.

A tight supply of homes in the 57-town region and elsewhere in Connecticut, coupled with historically low mortgage rates, have propelled prices rapidly higher.

But as the number of homes for sale grows, the pace of price increases typically slows. When buyers have more properties to choose from, competition among them cools.

Sellers are less likely to get their asking prices, and multiple bids, which help push up sales prices, become less common.

And while most economists and real estate experts expect the Greater Hartford market to remain healthy, homeowners should not expect the yearly, double-digit price increases of the past few years.

Economists and real estate professionals say they sense a change in the market that could eventually lead to a slowing of sales price growth in the area.

"You're seeing more homes on the market, and homes staying on the market longer," said Bob Fiorito, manager of the Beazley Co. real estate office in West Hartford. "It was a heated market with low inventory. We're starting to see that change a bit."

Todd P. Martin, economic adviser to People's Bank, said the higher number of homes on the market is significant because spring and summer are typically peak buying and selling seasons.

In recent years, Greater Hartford saw double-digit increases in sales prices and three years of record-breaking sales.

So far, sales prices continue to climb. In July, the median sales price rose 12.68 percent to $240,000 from $213,000 the previous year.

The average sales price increase was more moderate, rising 6.72 percent, to $274,039 from $256,784 in July, 2003.

But as prices continue to rise, more buyers will be locked out of the market, particularly because Connecticut is not seeing income growth.

No one expects housing prices in Greater Hartford to drop the way they did in the early 1990s when the market was flooded with new construction and demand couldn't keep up.

But instead of annual increases of 15 percent, as some towns experienced the past few years, prices might instead rise 5 or 7 percent a year instead, Fiorito said.

Ronald F. Van Winkle, a West Hartford economist, said another closelywatched indicator is the average number of days it takes to sell a house.

In July, that number rose 23 percent, to an average 48 days from 39. .

Beyond greater supply, Van Winkle said, other factors also may slow the pace of price increases.

Because the housing market has remained hot for so long and mortgage rates are low, many people have already purchased homes, Van Winkle said.

And job growth in Connecticut remains weak. That doesn't give workers confidence to take on bigger mortgages, because they are not sure they would be able to find new or higher paying jobs if they lose theirs.

The association's statistics for July also show:

New listings in July rose 2.3 percent, to 1,690, from 1,652 for the same month a year ago.

Houses under deposit rose 7 percent, to 1,193, from 1,115.

1,183 closed sales, down 1.74 percent, from 1,204 in July, 2003.

The statistics include most existing-home sales, but some for-sale-by-owner transactions are not included.

A discussion of this story with Courant Staff Writer Kenneth Gosselin is scheduled to be shown on New England Cable News each hour today between 9 a.m. and noon.